Wow, Lake Norman’s real estate market has seriously been taking us on a roller coaster ride in 2017. January home sales were up 30%, February home sales were down 34% and now this! Our March home sales were up a HUGE 73% compared to last March and it was’t just the best March ever by a long shot, but was the 5th highest monthly sales in 12 years! Now we need to get into the details to find out exactly what contributed to this amazing month. Let’s take a closer look:
* All data is from the Carolina Multiple Listing Service.
Some significant additional statistics for you:
- “Waterfront homes continue to under perform at an almost equal percentage despite Lake Norman’s overall up and down sales numbers. Darn it! Waterfront properties represented only 25.5% of our March closed sales. At the same time they currently comprise 41.6% of our active listings. The average sales price of a waterfront home in March was $864,850 which is up from last month’s $702,479 but down from our high of $1,073,960. The average price per square foot of our waterfront homes came in at $236.81, up slightly from last month’s $224.55 but down from January’s $249.86. This number is best averaged over a longer period of months because it only takes one or two really expensive sales ($2- 3 million+) to skew any given month. It took on average 124 days for a waterfront home to sell (verses 94 for all Lake Norman homes)and they sold for 96% of the listing price. We currently have 92 waterfront homes under contract comprising 26.2% of our total homes under contract. The good news is that our waterfront homes’ months of inventory dropped down to 7.6. Waterfront home sales are still overall in a buyer’s market so it remains a good time to buy a waterfront home IF you can find a good one. Keep in mind that this varies quite a bit by price range, location and quality of water. Don’t be complacent because when really nice waterfront properties hit the MLS they are actually selling quickly.
- 43 new construction homes closed in March through our MLS but this does not reflect an accurate picture of new home sales since so many are custom or are purchased directly from the builders and therefore never enter the MLS. (In fact, this segment of the market may be skewing our Lake Norman home sales numbers quite a bit.) The average listing price vs sales price of new construction single family homes was once again 100%. There is still very little if any wiggle room in new home prices. (But ask for all those great upgrades!) We currently have 118 new construction homes under contract in the MLS. The average sales price in March logged in at $393,499. The months of supply of active listings based on March sales stands at 5.2 so overall new construction homes are technically in a seller’s market but again this varies by location and price range.
- Distressed sales” (Foreclosures (REO’S), defaults, Short Sales) represented less than 1% of Lake Norman’s total home sales. With just 1 distressed closed sale for the entire month it is clear they didn’t play a role in March at all. (That said, we do have 13 under contract which is more than usual). Distressed active listings currently comprise 1.1% of Lake Norman’s current total inventory of single family homes for sales. Distressed sales continue to play an insignificant role in our Lake Norman real estate market.
- 51.1% of Lake Norman’s March’s single family home sales were under $400,000 which is slightly below last month’s.
- 71.1% of Lake Norman home sales in March were under $500,000, which is slightly higher than to last month’s.
- Here is where the good news continues: our “Under Contract Show” AND “Under Contract No show”/Pending sales combined total of 351 is the highest number since I have been keeping these records! We have 18% more properties under contract than at the same time in 2016 and 29% more than March 6, 2015! Surely this will translate into some exceptionally high numbers for the next several months.
A closer look at the chart:
- The number of Active Listings today in Lake Norman is down 2% compared to last year’s at this time. While increasing since the seasonal lows in January our number of active listings right low are actually lower than last year’s which is not good as we need more inventory. Today we have 836 single family homes for sale in all of Lake Norman down from last month’s 844 but up from February’s 824, 766 in January, and about equal to the 841 in October but still shy of last September’s 909 and well below June’s 1033. We were following a very common seasonal trend in numbers of active listings until our drop this past month. We should continue to see them increase all spring into early summer. Our absorption rate/months of supply of active listings dropped dramatically to 4.6 from last month’s 13.1 which puts Lake Norman overall in a seller’s market. This is the lowest in quite some time and could hurt future sales. Keep in mind, however, within specific price ranges there are swings from a buyer’s market to a balanced to a seller’s market.
- Under Contract Show (conditional sales), are up a whopping 32% versus this time last year! The average price of our new contracts is also up 6% and the days on market dropped 2% to 89. UCS are homes that just went under contract (have an accepted offer) and still have financial and inspection contingencies. These newer sales should represent strong future closed sales most likely in May/June.
- Pending/Under Contract No Show sales are down 8% compared to March 2016’s. These listings went under contract on average in 89 days which is 1% longer than last year. While our future looks bright thanks to our new Under Contract Show numbers, these relatively weak Pending numbers indicate we may experience a more modest month of closed sales in April and then pick up steam the following months. Another moderately weak spot is the average sales price which, at only $454,435 was 5% below last March’s. Pending sales are contracts that are past their inspection/due diligence periods and are just waiting to close. They are usually the best indication of closed sales this month or early May.
- Lake Norman’s closed March home sales in our MLS as of today and as stated above, were an astounding 73% higher than last March’s and the 5th highest month of sales since 2005. To top it off, our average sales price was up 7% and the number of days on the market dropped 1%. So, after a really very bad month of sales in February we had a record-breaking March. A little, crazy, yes?
The total number of Lake Norman homes under contract (UCS + UCNS) in the first week of each month are as follows:
- April 6, 2017: 351
- March 6, 2017: 295
- February 6, 2017: 227
- January 6, 2017: 183
- December 6, 2016: 237
- November 6, 2016: 275
- October 6, 2016: 274
- September 6, 2016: 288
- August 6, 2016: 325
- July 6. 2016: 313
- June 6, 2016 344
- May 6, 2016: 340
- April 6, 2016: 297
- March 6, 2016: 234
- February 6, 2016: 207
- January 6, 2015: 176
- December 6, 2015: 202
- November 6, 2015: 222
- October 6,2015: 209
- September 7, 2015: 268
- August 6,2015: 286
- July 6, 2015 287
- June 6, 2015: 304
- May 6, 2015: 313
- April 6, 2015: 272
Here is a breakdown by price-range of our March 2016 closed sales in Lake Norman
- $45,000 – $99,999: 3
- $100,000 – $199,999: 14
- $200,000 – $299,999: 30+
- $300,000 – $399,999: 45++
(These price ranges represented 51.1% of our March home sales)
- $400,000 – $499,999: 36++
- $500,000 – $599,999: 12
(These price ranges represented 26.6% of our March sales compared to 25.3% last month)
- $600,000 – $699,999: 10
- $700,000 – $799,999: 11++
- $800,000 – $899,999: 4+
- 900,000 – $999,999: 1-
(These price ranges represented 20% of March’s sales compared to last month’s 12.7%)
- $1,000,000 – $1,499,999: 9
- $1,500,000 – $1,999,999: 3+
- $2 million+ : 2
(#Solds $1 million+ = 7.7 % of March sales compared to 7.9% in February)
Now these numbers tell us exactly where our growth was and was not. We saw really impressive activity in the $200,000’s, $300,000’s, $400,000’s which reflect the bulk of Lake Norman’s current market strength but then we saw unusually strong sales in the $700,000’s. While the number of sales above $1 million all exceeded last month’s they improved proportionally with the overall sales so didn’t experience unusual growth. The majority of sales (77.7%) are still under $600,000. Our trade-up price ranges ( $600,000-$999,000) showed real improvement but primarily in the $700,000 price range.
Higher-end home sales in Lake Norman
It was nice to see higher numbers of sales in all three price ranges above $1 million but, as I said above, these really didn’t reflect any overall improvement since they still represent only 7.7% of our March sales. This niche simply has not recovered from our recession and experiences pretty wild swings from month to month. After several months with notable sales over $2 million, the absence of any sales above $1.2 million in February was disconcerting. At least in March we had 5 sales over $1.5 million. It will be very interesting to watch our luxury market in the next few months.
Lake Norman’s Waterfront Housing Market
As of today we have 92 waterfront properties under contract compared to 77 last month. Our months of supply based on March sales dropped back down to 7.6. While still in a buyers’ market, overall our waterfront market has improved. I took a closer look at the waterfront properties currently under contract and found that there are 25 properties over $1 million under contract which is hopeful. And, we have 8 waterfront homes in the $800,000’s and 7 in the $900,000’s under contract. A glimmer of hope. One of the issues with our current waterfront market is the fact that much of our current inventory includes older homes that need work and properties with less desirable water and/or locations. That said, the cream of the crop waterfront properties sell relatively quickly. With our current market it is more important than ever to know your price niche! Waterfront home buyers in the lower price ranges are going to have to lower their expectations and/or be willing to be more flexible. Keep in mind that the only finite property Lake Norman has is waterfront so supply and demand should drive prices up consistently in the future. I seriously believe that waterfront buyers should pounce when they find a good property with good water. Remember, good water trumps a good house on bad water.
As I wrote for the past several months, there is no doubt that Lake Norman’s waterfront homes suffered greatly during the recession. With the disappearance of the foreclosures and short sales during our recovery, there were several years where the greatest action was in the lowest priced waterfront tear-downs that had good water and to a lesser degree nice homes in higher price ranges with good water in good locations that were well priced. As this market evolves, prices have gone up despite rather tepid sales but have not fully recovered. Almost all of my waterfront buyers have had to increase their price range when they realize how much better the options are when they do so. But, I wonder if this is the reason waterfront home sales are still struggling. There may be many buyers who simply can’t increase their price range so have to turn to off-water options instead when they can’t find something desirable in their price range. It is also true that new listings with good water are selling more quickly than in the past while the rest are languishing. It is important for potential waterfront buyers to understand that there are fewer good options in the lower and trade-up price ranges so watch for new listings and act quickly. The lowest priced listings are mostly at the end of coves, can’t have docks or are in less desirable locations. Just as an FYI, I have sold several luxury home buyers waterfront lots this past year as an alternative to settling for a home that didn’t suit them or needed too much work. Prices are going up out of circumstances rather than overall market trends. See my Waterfront Home Sales 2005-2016 analysis.
13-Year Comparison of Lake Norman Home Sales By Month
* Please note that all of my numbers are for single family homes in what used to be referred to as “Area 13 – Lake Norman). They come from the Carolina Multiple Listing Service and will not include sales that took place outside of our MLS.** I adjust past months when I do the monthly update as a few more sales are usually input late by agents. ***With our new MLS Matix program there are some variances in numbers but I am not going to go back to prior years and adjust.
What a fascinating look at our highs and lows, especially the first three months of this year! We went from a record-breaking high January to an almost record-breaking low in February to a HUGE March. Thanks to our March numbers we are not 22.9% ahead of the first quarter of 2016. Note that we ended 2016 higher than every year but 2005 with over double the total sales of our low in 2009! We definitely struggled a bit in the first half of 2016 but then took off by August and never looked back. I can’t wait to fill in more numbers in our 13th column :-).
Summary and My Insight
- Our March closed sales were just amazing. The contrast from February is almost crazy. A 73% increase is unheard of!
- We had an 181% increase in sales compared to last month!
- Our current number of homes Under Contract and Pending indicate we will have strong closed sales in April/May with no slowdown in sight.
- Lake Norman’s home sales in the first quarter of 2017 were $22.9% higher than the first quarter of 2016.
- The number of distressed homes for sale remain so low that they are truly irrelevant and did not play any perceptible role in our Lake Norman housing market.
- New construction is definitely back in a consistent way. Custom and smaller groups of spec homes are popping up all over Lake Norman. Builders are telling me that they could built twice as many as they are if it weren’t for the shortage of qualified labor.
- New listings in the lower price ranges that are in good condition and in desirable locations are selling within days of hitting the MLS. But, really nice homes in the higher price ranges are selling quickly as well.
- Our trade-up and luxury home sales Under Contract numbers indicate that we are experiencing an upswing after struggling in February but overall they still remain erratic.
- Forbes ranks North Carolina second on best states for business list.
- Bankers and economists indicated that the Charlotte are economy will ramp up in 2017. Wells Fargo is forecasting at 2.1% growth in GDP next year compared to 1.5 this year. “We will continue to see folks and businesses moving here,” according to Mark Vitner, senior economist at Wells Fargo.
- Inventory levels, which should be increasing, actually dipped slightly this past month.
- Our slightly low Pending/UCNS numbers today indicate that we may not see such huge numbers in April.
- Mortgage interest rates, while down a bit in the past few weeks, have gone up and there is much speculation as to where they are headed. The Federal Reserve did raise their rate in March and there are predictions that they will increase them 3 more times in 2017. Economists can’t seem to agree on much of anything else about 2017 because of all of the unknowns related to the election so it remains to be seen where interest rates will be in 12 months.
- Lake Norman’s waterfront and luxury home sales continue to struggle to reach a full recovery.
- Existing home sales are being challenged by new construction! In head to head competitions new construction usually wins which hurts resale homes in the same or similar communities.
- Strict loan standards implemented during the recession are still making it more difficult for buyers to qualify despite some easing and modifications. Here is another big unknown related to our incoming administration. Some think there will be deregulations that will ease the mortgage loan process, especially for first-time buyers.
- Finding the perfect home can be challenging. Buyers who want perfection can’t wait too long to make decisions about new listings because the good homes and lots are selling very quickly. Watching the “hot sheet” is once again a part of the buying process for some price ranges and locations. Don’t procrastinate when considering a new listing because they are selling quickly!
- No matter how hard I try to provide you with the most accurate and insightful data, it is critical to know your own niche because there are so many variables in the Lake Norman housing market. Don’t assume all price ranges and locations are equal. You might be facing multiple offers and/or picked over inventory or you might not. See my price range analysis for the 4th quarter of 2016.
There is no doubt that Lake Norman is currently is a very dynamic market in the lower price ranges. But I don’t take this for granted given our strange drop in February. Where we will be in 6 months is very hard to predict. For the first time even the experts are unsure of the future of the US housing market due to the many unknowns with the new administration. Will the flat tax, long the single greatest issue fought by organized real estate groups, finally be a serious consideration? (Removal of mortgage tax deductions). Will easing of regulations impact affordability? With a potential increase in spending and inflation, how high will interest rates rise and how quickly? Will affordability become a greater issue for first-time home buyers due to interest rate increases and the removal of some housing assistance programs? What is the future of Freddie Mac and Fannie Mae if they are privatized? This list goes on and only time will tell.
Despite all of these potential challenges, I am still upbeat about our overall Lake Norman real estate market. Every year since 2011 we have seen year to year growth with total numbers nearly back to 2005’s record sales. Our market up to $600,000 is very strong. However, I am uncertain about the direction of our trade-up, luxury and waterfront home sales.
Buyers in 2017 should be prepared to: be more flexible, be willing to do some work on their newly purchased home and do their own updating if possible, lock in interest rates as soon as you are ready to buy if your lender recommends doing so, and be more flexible about locations based upon our limited inventory.
Sellers should watch a lot of HGTV and be prepared to do painting, flooring and staging to attract buyers! I just sold a home with multiple offers where the seller tripled his investment in staging and preparing his home for the market.
Always keep in mind that the real estate market in Lake Norman is extremely diverse. Make sure you know what is happening right now in your market niche. While your perfect home might come along, don’t wait too long and don’t dismiss a property if it isn’t perfect. Prioritize: Location, quality and depth of water (if waterfront buyer), lot and floor plan. Then, to determine a realistic price, use VERY RECENT comparable sales in your specific market niche. The selection may not be great but with interest rates rising along with prices it is not time to sit on the fence. With less than 2% of Lake Norman’s current listings being distressed (foreclosures, short sales etc.) don’t expect a “bargain” to come along at an unrealistic price. If you read my post: Really Cool Real Life Examples of Home Values Trends in Lake Norman you will know that a lot of our new listings are selling VERY quickly and at higher prices. I have also noticed a growing pace of price reductions. I think listing agents are getting sellers to lower prices more quickly now that the market is stronger in order to take advantage of this before interest rates go higher. Our market is ever evolving!
My Mantra as always: Don’t focus as much on the price as on the future marketability of the property. A bargain that has incurable issues that will make it difficult to sell in the future really isn’t a bargain at all. Be smart!
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